Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 54 views

    Kenya Methodist University: Endof1 Trimester 2022 (PT) Examination

    Uploaded by

    Joe 254
    This document provides information about an examination for an accounting course on taxation at Kenya Methodist University. It includes 5 questions testing various aspects of tax law: 1) Explaining canons of a good tax system and calculating taxable partnership profit. 2) Distinguishing tax evasion from avoidance and ways governments lose tax revenue on imports. 3) Computing income chargeable to tax and tax payable for an individual. 4) Stating merits of VAT and completing a VAT account. 5) Providing short notes on self-assessment, notices of objection, NSSF, PIN, and housing valuation for employees.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Kenya Methodist University: Endof1 Trimester 2022 (PT) Examination

    Uploaded by

    Joe 254
    54 views5 pages
    This document provides information about an examination for an accounting course on taxation at Kenya Methodist University. It includes 5 questions testing various aspects of tax law: 1) Explaining canons of a good tax system and calculating taxable partnership profit. 2) Distinguishing tax evasion from avoidance and ways governments lose tax revenue on imports. 3) Computing income chargeable to tax and tax payable for an individual. 4) Stating merits of VAT and completing a VAT account. 5) Providing short notes on self-assessment, notices of objection, NSSF, PIN, and housing valuation for employees.

    Original Description:

    Original Title

    Untitled

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document provides information about an examination for an accounting course on taxation at Kenya Methodist University. It includes 5 questions testing various aspects of tax law: 1) Explaining canons of a good tax system and calculating taxable partnership profit. 2) Distinguishing tax evasion from avoidance and ways governments lose tax revenue on imports. 3) Computing income chargeable to tax and tax payable for an individual. 4) Stating merits of VAT and completing a VAT account. 5) Providing short notes on self-assessment, notices of objection, NSSF, PIN, and housing valuation for employees.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    54 views5 pages

    Kenya Methodist University: Endof1 Trimester 2022 (PT) Examination

    Uploaded by

    Joe 254
    This document provides information about an examination for an accounting course on taxation at Kenya Methodist University. It includes 5 questions testing various aspects of tax law: 1) Explaining canons of a good tax system and calculating taxable partnership profit. 2) Distinguishing tax evasion from avoidance and ways governments lose tax revenue on imports. 3) Computing income chargeable to tax and tax payable for an individual. 4) Stating merits of VAT and completing a VAT account. 5) Providing short notes on self-assessment, notices of objection, NSSF, PIN, and housing valuation for employees.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    KeMU 1st Trimester 2022

    KENYA METHODIST UNIVERSITY


    END OF 1ST TRIMESTER 2022 (PT) EXAMINATION
    SCHOOL : BUSINESS & ECONOMICS
    DEPARTMENT : BUSINESS ADMINISTRATION
    COURSE CODE : ACCT 431
    COURSE TITLE : TAXATION
    TIME : 2 HOURS

    INSTRUCTIONS
     Answer Question One and any other Two Questions.

    TAX TABLES - YEAR 2021 RATES


    Personal Tax rates

    Monthly Taxable Pay (Ksh) Annual Taxable Pay (Ksh) Rate of Tax (%)

    Up to 24,000 Up to 288,000 10
    24,001 – 32,333 288,001 – 388,000 25
    Over 32,333 Over 388,000 30

    Personal Relief sh, 28,800 per year.

    Wear and Tear Allowance

    Heavy earth moving equipment 25%


    Motor vehicles 25%
    Computer & computer peripheral hardware,
    calculators, copiers 25%
    Furniture and fittings 10%
    Telecommunications equipment 10%
    Filming equipment 10%
    Software 25%

    Question One – [30 Marks]

    Page 1 of 5
    KeMU 1st Trimester 2022
    a) Explain briefly five canons of a good tax system. [10 Marks]
    b) The trial balance of Kwendo and Panga, trading as partners and sharing profits in the ratio
    2:3 as at 31 December 2021 is as follows:

    Sh. Sh.
    Capital: Kwendo 3,600,000
    Panga 5,221,000

    Factory building 5,000,000


    Furniture at cost 750,000
    Factory equipment at cost 2,000,000
    Director’s car at cost 1,000,000
    Provision for depreciation 710,000
    Depreciation expense 115,000
    Debtors and prepayments 1,050,000
    Stocks as at 31 December 2005 1,042,000
    Creditors and accruals 853,000
    Balance at bank 720,000
    Gross profit on trading 4,165,000
    Rent and rates 300,000
    Office salaries 826,000
    Partners salaries 600,000
    Advertising costs 210,000
    Transport costs 236,000
    Deposit on new equipment 100,000
    Short term investment 600,000 ________
    14,549,000 14,549,000

    The following additional information is provided:

    1. Rent and rates are for fifteen months to 31 March 2022


    Page 2 of 5
    KeMU 1st Trimester 2022
    2. The partners have contracted to purchase new equipment for the factory at a cost of
    Sh.500,000. A debt of Sh.100,000 was paid during December 2021 and the remainder
    will be paid during January 2022.
    3. The factory building has been revalued from Sh.4,000,000
    4. The partnership started operating on 1 January 2021
    5. Partnership salaries are taken equally
    6. Interest on capital is to be provided at 10% on balance given.
    Required
    i. Taxable partnership profit for the year of income 2021. [15 Marks]
    ii. Show the allocation between partners. [5 Marks]
    All computations and support notes must be provided.

    Question Two – [20 Marks]


    a) i) Distinguish between tax evasion and tax avoidance. [5 Marks]
    ii) The recent debate relating to importation of goods through the port of Mombasa has
    had one of its issues the amount of tax assessed. Specify briefly at least three ways in
    which the Government may lose tax revenue on imports.
    [5 Marks]
    b) Explain the procedure for objecting to a tax decision by the commissioner. [6 Marks]
    c) Distinguish between tax impact and tax incidence. [4 Marks]

    Question Three – [20 Marks]


    Mr. Lotodo is finalizing his tax affairs for the year of income 2021. He and his wife had the
    following income and transactions for 2021:
    1. Mr. Lotodo’s income:
     He has paid Sh.162, 000 Value Added Tax on all his purchases for the year
    Page 3 of 5
    KeMU 1st Trimester 2022
     He was an employee of Bomet Tea Limited and was paid an annual salary of
    Sh.1,400, 000 (P.A.Y.E deducted was Sh.285, 000).
     Pension contribution to a registered scheme were Sh.200, 000 by his employer
    and Sh.100, 000 from his pay.
     Dividend received was Sh.40, 000 gross. (Withholding tax was deducted as
    appropriate).
     Gross interest received was sh.18, 000 of which Sh.10, 000 was from Post Office
    Savings Bank.
    2. Mr Lotodo’s expenses for the year:
     Personal accident insurance premium of Sh.9, 000 paid to Kenya One Life
    Insurance Company of Nairobi, Kenya.
     Life insurance premium on self-life of Sh.15, 000 paid to World Life Union
    Insurance of the United Kingdom.
     Alimony to his first wife of Sh.6, 000 per month
     Mortgage interest of Sh.62, 000 on his house where he stays with his wife and
    children. The mortgage is from Savings and Loan Kenya Limited.
    3. Mrs Lotodo’s income:
     She was an employee of Mabati Limited who paid her a salary of Sh50, 000 per
    month. P.A.Y.E of Sh.14, 000 was deducted per month from her salary.
     She made a profit of Sh.900, 000 from the sale of a plot in Nairobi inherited from
    her father.
     She used the money from plot sale to start a private clinic. She is a registered
    clinical officer. In the year of income 2021, she made an assessed loss of Sh.240,
    000.

    Required
    a) What is a registered pension scheme and what are its implications? [5 Marks]
    b) Compute the income chargeable to tax of Mr Lotodo for the year 2021. [8 Marks]
    c) Calculate the tax payable (repayable) by him for 2021. [4 Marks]
    d) Give a list of statutory deductions in Kenya. [3 Marks]

    Question Four – [20 Marks]

    Page 4 of 5
    KeMU 1st Trimester 2022
    (i) State the merits of value added tax (VAT) in the context of the principles of a good tax
    system. [10 Marks]
    (ii) Given below were the purchases and sales made by Chai Limited during the month of
    December 2021. The prices were inclusive of VAT at the standard rate of 16 percent.
    December 1 Purchased 400 units at Sh.5,600 per unit
    Sold 40 units at sh.7,200 per unit
    5 Sold 80 units at Sh.7,200 per unit
    10 Sold 200 units at Sh.7,200 per unit
    20 Purchased 300 units at Sh.6,400 per unit
    25 Sold 80 units at sh.7,200 per unit
    31 Sold 200 units at Sh.8,000 per unit

    There was no inventory at the beginning of the month but 100 units were in stock at the end of
    the month.

    Required
    (a) The VAT account for the month of December 2021. [8 Marks]
    (b) On what date is VAT due payable? [2 Marks]

    Question Five – [20 Marks]


    With reference to Income Tax, write short notes on the following:
    (a) Self-assessment; [4 Marks]
    (b) Notice of Objection; [4 Marks]
    (c) NSSF; [4 Marks]
    (d) PIN; [4 Marks]
    (e) Valuation of housing for employees. [4 Marks]

    Page 5 of 5

    You might also like